“Lifestyle” shopping: more on the way

Construction of outdoor malls, or lifestyle centers, is outpacing construction of enclosed malls both nationally and in Bakersfield, but while the centers are popular with developers and consumers, it’s not entirely clear whether the region can sustain everything that’s been proposed.

If all the approved projects are built, the city will have four lifestyle centers in addition to more traditional malls such as Valley Plaza, East Hills and Golden State.

The Marketplace at Ming Avenue and Haggin Oaks Boulevard was Bakersfield’s first lifestyle center, opening in 1996 with 298,000 square feet of space that is now 97 percent leased. Anchors include Olcotts, Edwards Bakersfield 14 theater and Williams-Sonoma. An Ulta Beauty and a Camille’s Cafe are coming soon.

One other lifestyle center is partially built, and two more are in the pipeline.

The 48-acre mixed-use Shops at River Walk development on Stockdale Highway is well underway, and last year the Bakersfield City Council approved Saco Ranch, a 323-acre commercial and retail project at 7th Standard and Coffee roads; and Bakersfield Commons, a 255-acre retail, residential and commercial development at Coffee and Brimhall roads.

Taking it slowly

The success of Shops at Riverwalk has been mixed, and neither Saco Ranch nor Bakersfield Commons have announced any tenants since the projects were approved in August.

Shops at Riverwalk developer Castle & Cooke has had more luck luring restaurants than stores. Eateries there include BJ’s Restaurant and Brewery, California Pizza Kitchen, The Elephant Bar and P.F. Chang’s. Construction of a Chipotle Mexican Grill and a Eureka! Burger will start later this year. Eureka! Burger is new to Bakersfield. The company sells gourmet hamburgers and craft beers.

Some neighbors in the area were upset when Castle & Cooke failed to deliver on an upscale anchor, installing a Target, instead. Other stores have been slow in coming.

“We’re doing what the economy allows us to do,” said Scott Thayer, vice president of land development and commercial properties for Castle & Cooke.

It would be unwise for Castle & Cooke or anyone else to build on speculation in this environment, Thayer said, so the company is constructing one building at a time as signed agreements come in.

Bakersfield Commons developer World Oil Corp. says it’s not giving up on the project despite the lack of tenants to date.

“It’s still moving forward, but a little bit more slowly than had been originally planned, and that is due largely to the economy,” said Bakersfield Commons spokesman Steve Sugarman.

Tenants scarce

A lot of commercial developers have lost momentum in an economic downturn that has seen several venerable retail chains cut back or close entirely.

Even power centers, home to popular big box stores, have been under pressure from the loss of Mervyns, Circuit City, Linens ‘N Things and Borders.

If even they can’t keep anchors, there’s a tough road ahead for lifestyle centers, which typically target affluent customers, according to real estate experts.

These open-air shopping venues rely less on the swanky department stores that anchor enclosed malls than on restaurants, movie theaters and other entertainment options designed to draw foot traffic to upscale specialty retailers.

The problem is, there’s not nearly as much demand for upscale shopping in an economy that’s been marred by high unemployment, pay cuts and furloughs.

“Lifestyle centers are all the rage, all anyone’s building,” he said. “That’s not uncommon. When someone builds something that does well, everyone tries to replicate it.

“The problem is, they’re targeting a more upscale customer so they have to spend a lot more on the design and construction of the building. But once it goes up, they aren’t getting the higher rents they were anticipating from higher-end stores.”

Jeff Green of Phoenix retail consulting firm Jeff Green Partners. is more optimistic, but not by much.

“Lifestyle centers have almost run their course,” he said. “Most of them are struggling, but most of the ones in trouble are newer ones in markets that are overbuilt, which Bakersfield is not.”

Not yet.

The question is, what’s going to happen here when the new lifestyle centers finally open?

“There are lots of opportunities there long-term based on the size of the city and the demographics there,” Bakersfield Commons’ Sugarman said. “Not only is there room for Bakersfield Commons, but it won’t come at a cost to the other centers in the area.

“There’s a lot of untapped potential.”

The Marketplace declined to comment on what impact, if any, the new centers would have on the one lifestyle center in town that’s full.

Bidart Bros., developer of rival Saco Ranch, could not be reached for comment.

Enclosed malls more prevalent

Although new construction is almost exclusively open-air malls, enclosed malls still outnumber lifestyle centers nationally.

There are 1,100 regional and super regional enclosed malls in the United States, and 400 lifestyle centers, according to CoStar Group.

Locally, Bakersfield hasn’t had an enclosed mall break ground since East Hills Mall went up in the late 1980s.

East Hills has been restructuring under bankruptcy protection since 2009. Like rival Golden State Mall, it has no major anchors and is almost completely devoid of national retailers. Tenants mainly are small, independent shops in month-to-month leases.

East Hills’ owner, BH Malls LLC, did not return a telephone call seeking comment, but there is a motion pending in federal bankruptcy court to consider converting the Chapter 11 restructuring to Chapter 7 liquidation.

Valley Plaza’s owner, Chicago-based General Growth Properties, emerged from Chapter 11 bankruptcy in November of last year.

Built in 1967, the 1.1 million-square-foot Valley Plaza is a strong asset in the portfolio of the nation’s second largest shopping mall company.

General Growth got into trouble not over the quality of its malls but because it was too heavily leveraged.

“Their properties are for the most part well leased and they have a good relationship with retailers,” consultant Green said.

But even established malls will have their work cut out for them if the newer, sleeker lifestyle centers ever see the light of day.

Castle & Cooke is betting the trendy concept will hold its own. Target notwithstanding, when completed Shops at Riverwalk will be a lifestyle center, not a power center, Thayer insisted.

“We still have that vision for the design of the Shops at Riverwalk,” he said. “It’s got that Main Street look, and especially in areas with good weather, people like that. Shopping outside, community spaces, that’s what they want.”

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Jeff Green Partners was founded in May of 2004 in response to a growing demand for a new level of expert consulting services in the retail real estate marketplace. Led by President and CEO Jeff Green, Jeff Green Partners provides a full spectrum of analytical and interpretive services for property owners and developers.